Why This Approach to Market Research Is Important to Entrepreneurs

The difference between gathering information about customer preferences for new and existing products and services is particularly important to successful entrepreneurs, who are more likely to develop radically new products or services than to make incremental improvements to existing products or services. Why? Successful entrepreneurs do not have existing products and services on which to make incremental improvements. Therefore, all of their effort to gather information about customer preferences is about preferences for new products and services.

As is explained in greater detail in chapter 6, the best opportunities for you to exploit as a technology entrepreneur are those where a market is new and demand is unknown because the advantages and capabilities of established firms are minimized in these situations. The types of advantages that established firms have—things like having moved up the learning curve and having created capabilities—are least important when a market is new. As a result, you are best off introducing new products and services in situations in which the traditional market research techniques of focus groups and surveys are least effective. Moreover, it is in precisely these situations that established firms will often obtain the least accurate information about customer preferences. Because large sample research tends to be inaccurate for uncertain opportunities, the large sample market research techniques of established firms are most likely to lead them astray, thereby giving you an advantage in understanding customer preferences for new products and services.